Hello, and welcome to Thunderful Group Q3 presentation. My name is Simon Jönsson. I'm an Equity Analyst with ABG Sundal Collier. Today, management will hold a presentation of the report, which will be followed by a Q&A session hosted by me. If you have any questions, please type them in, below on the webpage, and we will make sure to bring them up later. And without further ado, I will leave the floor to, to Martin and Anette. Thank you very much, Simon. Thank you, Simon. Thank you. Good morning. My name is Martin Walfisz. I've been with Thunderful for about two and a half months, but I have almost three decades of experience leading games companies. So today I'm here together with Anette, my CFO, and this is the agenda we're going to go through. So we're going to focus first on the key highlights for Q3, then a brief section of an introduction of Thunderful, a bit of a deep dive into the financial details of the Q3 by Anette. Then I'm going to share a few CEO reflections and a few key takeaways, and then we move on to the Q&A session. If we look at the Q3 key highlights, we just released a report this morning, and we have a total net sales of SEK 626 million, of which distribution stood for SEK 536 million, and games stood for SEK 90 million. We're happy to announce that we had good and improved profitability in the distribution segment, primarily driven by Amo Toys and Bergsala. New releases in the game segment contributed SEK 19 million to the net sales. So we have an adjusted EBITDA of SEK 83 million and adjusted EBITDA of SEK 49 million. million. Our cash flow from operations amounted to minus SEK 62 million, and the negative cash flow was primarily impacted by a decrease in accounts payable. We made a total of SEK 83 million of investments, primarily in games development and publishing rights. The earnings per share for Q3 was SEK 0.35. So moving on, sharing a few comments on the Q3 highlights. So I want to divide it into, obviously, the distribution segment. So Amo Toys had a really good quarter with its best Q3 ever and one of its absolutely best quarters ever. Bergsala performed really well, thanks to high-margin sales, good, really good sales of high-margin products. Nordic Game Supply is unfortunately underperforming, primarily due to lower demand in the market. After the quarter, we sold off some of NGS's product portfolio to another distributor, and who also took over some of the external suppliers that NGS has been working with previously. In mid-September, we were joined by a new Executive Vice President of Distribution, so he has just started, and he is now assessing potential improvements that we can do on the distribution side. In the game segment, I want to split it up into two different areas. We have game production. In Q3, we have increased investment in capitalized game development. Our studio in the U.K., Coatsink, keeps delivering on co-development projects, and they are also continuing their good collaboration with Meta in 2024. We have a recently joined VP of Studios, who have started to look into the segment and the production area and is doing a bunch of improvements. We are looking closely at improving the greenlight process, so we are more careful and determined when we do investment decisions. We have also set up a centralized production services team that is helping both internal and external studios to improve their production efforts and quality. And then we have uncovered some historical production issues that we are working with and improving. After the quarter, our studio in Karlshamn, The Station, completed the SteamWorld Build Gold Master, so it's all ready for release on December 1st, as previously announced. On the publishing side, in Q3, we had a launch of Viewfinder, which was the only major launch in the quarter. We've unfortunately had a continued weaker development on the Partners revenue, but I'm glad to say that our new VPs of Marketing and VP of Partners, who both joined in the summer, are also already starting to implement some good improvements, focusing on doing better sales forecast and working more closely with different key performance indicators, optimizing our back catalog sales, and also moving into doing more market research, and making sure that we have a better idea of how to pick and also publish the games in the best possible way going forward. So for those of you who are not very familiar with Thunderful, a few slides just give an introduction to the group. So, we are just above 500 employees today. We have 10 internal game studios that are working on 14 different games. We have 18 different games in the external publishing pipeline, so 18 games we're working with external developers. The revenue for the last 12 months was just above SEK 3 billion. We are working closely with a bunch of different partners, Nintendo, most prominently on the distribution side. We have been distributing Nintendo products since 1981, so a very successful and ongoing collaboration. We're also the distributor in the Nordics for Squishmallows, which is a very big brand. If you have kids in the Squishmallows age, then you've definitely heard about this. Our internal IP, SteamWorld, that I already mentioned, is our main IP, that we own and have built from scratch, so we're continuing to work with that. And as mentioned, we're working also very closely with developing games, with Meta, for their various VR efforts. So the distribution segment contains, or consists of Amo Toys, that is our toy distributor in the Nordics, Bergsala, as I mentioned, the Nintendo distribution in the Nordics and the Baltics, and then Nordic Game Supply that distributes PC and gaming accessories and peripherals. In the game segment, we have, as mentioned, 10 different game studios, across Europe, primarily in Sweden, U.K., Germany, and Spain. And we've divided the game segment really in four different revenue streams. So IP building is where we invest in game projects, both internal and external. Co-development is when we work with external partners, like Meta, to do games together with them. Partners is where we help primarily indie developers, smaller developers, but we help them with their publishing effort, and get a part of their revenue share, as the upside for us. And investments, of course, is when we invest both in acquiring studios, but not least, also acquiring IPs that we can continue to build and nurture in the coming years. So looking a little ahead, in Q4, December first, as mentioned, we have SteamWorld Build launching, so we're very excited about that. That's the first new SteamWorld game coming out since 2019. We also have a new SteamWorld game planned to come out next year. So the idea going forward is to have one new SteamWorld game coming out each year, and then, of course, in addition to that, have add-on packs and DLCs for the existing launched SteamWorld games. Also very happy with our collaboration with LEGO and with Meta, so we are launching LEGO Bricktales VR later this year in December. In 2024, we have Planet of Lana that was launched this year, but we have versions coming out for Switch and PlayStation 4 and PlayStation 5 coming next year. Replaced is also another title that I think looks fantastic, that is coming out next year. We have, of course, more titles to be announced. Oh, yes, and of course, I want to mention Super Mario Bros. Wonder, that was launched a couple of weeks ago in Q4, which is obviously a huge title for Nintendo and for us as well. So in moving on to the Q3 financial details, Anette? Thank you, Martin, and good morning, ladies and gentlemen. I will now do my best to put some more colors and flavor on the financial figures. So for the group, this quarter, net sales decreased by 9.4% to SEK 626 million, whereof distribution had SEK 536 million, and games, SEK 90 million. We are, we are very pleased to see that the gross profit margin improved by 11.2 percentage points to 45.1%, thanks to improved margins in general and favorable product mix in both Amo Toys and Bergsala. Adjusted EBITDA reached SEK 83 million, an increase of 8%, mainly thanks to higher margins in Amo Toys and Bergsala. Despite, actually, despite increased personal expenses of 66 FTEs, approximately SEK 30 million, and within games. I will come to that later on. Adjusted EBITDA decreased to almost SEK 50 million due to increased depreciation in the quarter. The net profit reached SEK 24.7 million, almost doubled, and it's positively affected by the exchange rates. Moving into distribution. Net sales decreased by 6.5% to SEK 536 million. Amo Toys, as Martin mentioned, delivered all-time high Q3, and it's very satisfying to see that it goes for both sales and margins. The increased gross profit margin is throughout the whole product portfolio, and that is great to see. It can also be mentioned that you, Martin, also mentioned about the Squishmallows. They are very popular right now. Bergsala decreased by 5.6%, both for hardware and software, while accessories such as Joy-Con increased. It can also be mentioned that Splatoon 3 had its release Q3 2022, and Mario Kart 8 Deluxe had high sales in the comparable quarter, 2022, just to compare the quarters. The gross profit margin increased for the majority of the products for Bergsala as well. Nordic Game Supply still have difficulties due to continued low market demand for both sales and margins. The adjusted EBITDA increased to SEK 53.3 million, and 9.9% margin, an increase actually by 6.7 percentage point. Let's move into games. Net sales decreased by almost 24% to SEK 90 million, whereof new releases contributed with SEK 90 million, and that was actually Viewfinder being the largest one. Coatsink and Thunderful Publishing are the ones that are driving the net sales and EBITDA contribution for this quarter. Adjusted EBITDA decreased by 41% to SEK 36.9 million, due to increased 76 FTEs compared to last year. However, the personnel expenses this quarter are in line with the Q2 this year. Adjusted EBITDA decreased to SEK 8.5 million, with a margin of 9.5%, mainly due to increased depreciation. With higher numbers of games out on the market comparable to last year, and additional to that, we have had a write-down of a deal by SEK 4 million, and one game that actually should start the depreciation from February hit this quarter by SEK 6 million. Coatsink also had additional depreciation with SEK 6 million compared to last year. Then we also had the acquisition of Jumpship that was impacted with SEK 2 million for the quarter. Moving into cash flow for the Q3. So operating cash flow amounted to a negative SEK 62 million. The negative working capital amounted to SEK 127 million, which is mainly due to decrease in accounts payable by SEK 194 million, partly due to unusual high accounts payable end of June this year. Then we also had postponed supplier purchases that is usually done in Q2, passed to Q3 this year. We had an increase of SEK 22 million in inventory, mainly due to NGS and Amo Toys. They had a purchases prior to peak season, Q4, of SEK 67 million that was advanced to suppliers, advance payments. Accounts receivable decreased by SEK 76 million. Moving on to investing activities, amounted to SEK 83 million, whereof capitalized game development amounted to SEK 59 million, which is SEK 31 million higher than last year. This is mainly because we have now more developers employed, compared to last year. So we are now approximately 400 developers in the group, compared to 340 at the same time last year, whereof acquisitions stand for 34 FTEs. And the investment in publishing rights amounted to SEK 22 million, which is in line with last year, and whereof SEK 60 million stand for 6 games. Financing activities amounts to a positive amount of SEK 134 million, and that is mainly because we increased utilization of loan and credit facility by SEK 143 million. A little bit more about the cash. So available liquidity at the end of September was SEK 111 million, compared to last year, SEK 223 million. As you can see in the chart, that Q3 is the quarter when we purchases, when all purchases are made ahead of the peak season, Q4. Net debt amounted to SEK 522 million end of September, compared to last year, SEK 368 million. Last 12 months, net debt EBITDA ratio to 1.2 from 0.9 in Q2. Thank you. Back to Martin. Thank you, Anette. Thank you so much. Yeah, thanks. So moving on, I wanted to share some CEO reflections. Again, I've been with the company for two and a half months, so I haven't had much time, but I'm still obviously have looked as much as I can into the various segments and divisions of the company. I wanted to share some thoughts. I am gonna say that I'm gonna focus on where I see potential for improvement, but I want to start with saying that there are many, many talented and experienced and dedicated people in the group. So there are many good areas in the group, even though there are clearly areas where we can improve as well. One of the areas that I think it's important to improve is our management and leadership processes, where we need to clarify responsibility in some areas and also increase accountability. We are also not really managing the company and the group through key performance indicators as much as I would like. So that is something we're gonna look into going forward and see what KPIs we can introduce and make sure that we continuously follow up on. Connected to that, we can also improve our internal reporting and, as mentioned earlier, also our forecasting to make sure that we have a better grasp of our total business going forward. It should also be mentioned, it's pretty clear that investments have been higher than our cash flow supports, so we need to find a better balance and look at that going forward, making sure that we don't spend more than our financial capacity allows for. And of course, pausing M&A activities is also something we're doing temporarily, to make sure that we improve our structural foundation before we start looking at M&A again. So, some reflections on the distribution segment. So we need to continue working on decreasing our working capital, and obviously reducing and optimizing our inventory, but also seeing if we can renegotiate some payment terms. Enhance and leverage synergies between buying, logistics, and sales, so the different parts of the distribution operation can work more closely together to also find optimizations and make sure that we work better and in essence improve cash and profits in the end. Improve internal data visibility, so that's also something we've noticed with the new EVP of distribution that there is not enough data shared internally within distribution. We also need to identify the right key performance indicators going forward and make sure that we steer continuously through those KPIs. And then, as we've seen, NGS has had continued challenges, achieving profitability, so we're investigating that and see if that is a temporary market condition or if there are other actions that we need to take, in terms to improve NGS. Moving on to the game side, I'm very happy to see that there is a highly capable leadership team now in place. A lot of the VPs and executives in the games leadership team have joined this year and are starting to make a difference, and they are very senior and very experienced. Our internal game studios have a very strong creativity and passion, but it's also clear that they need better production guidance. We can work more efficiently to make both better games that should be more commercially strong as well. Our portfolio strategy is also something that I'm coming in and seeing that it's a little bit all over the place. So it's a work that has started now, and when we are ready to talk more about it, we'll share it, but it's clear that we need to have a more focused and clear portfolio strategy within the group. And then improve processes and efficiency is also something we definitely can and are doing now on the game side. User research and market testing, so as we work on various productions, we need to work more on user research, more make sure that we understand what is good and bad within a production that is ongoing, and make sure we make the right improvements. I'm also a big fan and very curious about how AI is going to change the games industry. I think it's going to make a huge difference. So going forward, we're going to investigate how Thunderful can use AI as a production efficiency tool. And then sales and partnerships is also clear improvements that we want to make, basically to improve our commercial commercial sense. Then the risk profile between IP building, where we take the risk and do the investments, versus our co-development, where we work with external partners and have a considerably lower risk. The balance between those two different revenue streams is something we need to look a bit closer at as well, and make sure that we probably need to find a better balance than we have today. And then finally, I want to say, I see a tremendous opportunity in expanding what I've started to call in our indie services, which is basically our Partners' revenue stream. Even though that has been decreasing during this year, as a business, I think as a strategy, it is something that is very, very interesting, how we can use our experience and publishing capacity to help indie developers improve their business and then sharing some of the revenue with us. So we'll see, going forward, how we can improve that, but I'm very curious about that strategy and continuing to execute that and improving it for the future. All right, to summarize, a few key takeaways. I'm very happy to see the improved profitability in the distribution, primarily driven by Amo Toys and Bergsala. So a big thank you to the Amo Toys team, again, for having their best Q3 ever. Well done. We are still investing. We'll continue to invest in the games and IP, games IP building, but so that we can generate good business in 2024, 2025, and beyond. And as mentioned just now, we have many different process and structural improvements we can do, so we will continue to work with that and dive deeper into that during 2024. And then finally, again, we need to keep a close eye on our cash flow and make sure that we don't invest more than we have financial capacity for. Yes. So moving on to the Q&A session. Simon? Thank you, Martin and Anette, for the presentation. Yeah, let's kick it off with a couple of questions from me. Let's start with the distribution segment. Yes ... and talk about first the strong Amo Toys. You mentioned Squishmallows, for example, a couple of times. You know, how big impact did that have on the total Amo Toys contribution, and what can we expect into Q4? I don't think we're not disclosing exactly how big Squishmallows was in Q3, but it's obviously... since we've mentioned it several times, a very good contributor for the quarter, and there is nothing that indicates that it's going to slow down in Q4. On the contrary, Q4 is obviously the best quarter typically for a company like this. ... But it's not only Squishmallows, even though it's part of it, but I mean, it's throughout the whole product portfolio for Amo Toys, I would say. All right. Yes. Just looking at some peers, you know, maybe not distributors, but resellers or sellers like Hasbro and Mattel, they've guided for potentially weak holiday sales. So is there any kind of indication in your business that you see any kind of slowdown or any read across? We still- Sorry, come in. Any read across from those statements? What I'm seeing and hearing, we still expect Q4 to be a really good quarter. But we'll have to see where it ends up. All right. Mm. Moving to NGS, you know, a couple of changes in that business. What kind of impact should that have on Q4? Well, NGS- Lower volumes, or how should we view it? Yes. We, since we did sell off parts of the portfolio, and different brands to another distributor now, after the quarter, that impact will be spread out over a bit of time, but it can absolutely have an impact in Q4. What kind of brands are we talking about? I don't think we have disclosed that, and that we're not talking about that. No, no, we have not. No, no. But, uh- All right. And, lastly, Bergsala, you mentioned Super Mario. How will that compare to Pokémon last year, which was kind of a big driver? I don't have that in my head, unfortunately. I don't know the Pokémon drivers or what Pokémon did last year for Thunderful, so I can't make that comparison. I don't know, Anette. I assume you have not had a chance to look into that either. No, not particularly, Pokémon, actually. I don't know that. Right. And otherwise, in terms of the pipeline for Nintendo products, is there anything you can say about coming quarters or coming year, how it looks? No, not really. I mean, Nintendo does what Nintendo does. And we're of course all curious and excited what happens in the next one or two years with Nintendo. And I guess that's all I can say. All right. Moving to games, what... Can you give any flavor on, you know, the performance for Viewfinder, what you compare to your expectations and, you know, what should we think about that game going forward? Yes. So Viewfinder was launched for PlayStation 5 and PC in July, and performed quite well, I would say, at expectations or even above expectations. And one thing we're obviously looking for, not just at Viewfinder, but any game that we launch on a subset of the platforms, we're going to look at to see, can we launch it on additional platforms to increase the business? So that's something we're looking at for Viewfinder, of course, as well. Right. And, in terms of the overall backlog for games- Yes, so the overall- Is it a slowdown or...? No, we see a slight increase, I would say. I think with the new leadership team coming in in the summer, we have definitely increased our focus on looking at how we can increase the sales of the back catalog. So the effects of that, we've seen, I think, some, some effects of it, but hopefully we'll see a bit more in the coming quarters. SteamWorld Build, of course, coming up. Yes, very excited. Do we have any marketing cost or something like that, pressure in Q3 here, or are we starting to ramp up marketing in Q4, or? We have not talked about any particularly high or extraordinary high marketing costs, so I... Actually, it's something I haven't looked into. I don't know, Anette, if you have, but I don't think, it's something we made a particular note for- No ... in Q3. Is it something, a title you want to spend some extra money on to market, or- Well- How should we view it? ... absolutely. I mean, trying to be smart about it, so not spend money just for the sake of spending money, but being very smart about where we spend it and why we spend it. So again, the leadership team that has come in is very experienced, and I expect them to spend that money quite wisely. But yeah, SteamWorld is our most important IP, and now for the first time since in almost four years, we're launching a new game. So it's of course we want to make as big a splash of it as possible. We, of course, also have good marketing efforts in collaboration with Xbox and the Game Pass launch that is going to happen day and date to the launch. Do you think that could cannibalize on, Steam sales, for example, the game? There, there is always a risk for that. Historically, Game Pass hasn't really cannibalized much. We've obviously looked very carefully when making the decision to make a Game Pass deal. We obviously make that calculation very carefully. And it's clear to us that we believe that the Game Pass deal in itself is better, considerably better than any cannibalization we could see. And we have a couple of questions from the web, and I'm also interested to hear about, you know, the CapEx and the investments in your projects. You talk about you want to be more, maybe a bit more conservative or at least spend it more, thoughtfully. So how do you view the capital allocation side? It seems like you want to reduce the CapEx potentially, a bit, and how do you want to reallocate that? Well, I think the main thing with our investments is to just make sure that going forward, we keep a, like I said, a close eye on our cash flow- Mm - and don't invest more than we have the financial capacity for. But having said that, Thunderful is still in an investment and growth phase on the games side. I mean, the whole strategy has been, and still is, to take, the nice cash coming out of the distribution and invest it into games, which is a higher margin business and higher growth business. So we're still sort of in that phase. And, even though we hope that we would see more cash coming out, previously from the games side, the strategy is still sound, I'm convinced of. And we just need to make sure that the launches we do in 2020-- well, December 1st, not least, but also in 2024 and 2025, start generating, enough cash so that we can continue investing and growing, the games side as planned. Well, make sure we get value for money. Yes. Invest in the right- Yes, absolutely. And improve the strategy. Yes. That is, of course, always the trick in this industry, is to make sure you make the right investment decisions to start with, but then also work very, very closely with the development teams, the studios, external or internal. Like I said, we need to look at improving our processes and becoming more efficient there, and making sure that we help our teams make better games, both in Metacritic quality level, which we have historically been good at, but also commercial viability. Could a consequence of the new processes and greenlighting processes be that you, you're gonna close down some existing projects or...? We don't expect to close down any existing projects as we look at it now. We deem that the funding and financing we have in the company, as we said, is sustainable for us to go ahead. But it's, of course, something we're looking closely at. We need to make sure that the money we spend is money we have. But we're talking about just the process that, in an earlier stage of the game, take the decision if you want to continue or not, in an earlier stage than we do today in the process. Yes. And to give some color to that, I mean, any games publisher, any games business is always looking at the existing production pipeline, and exploring what can we put more money into, if needed, and what have we lost faith in and should either put on ice or completely cancel? Mm. Kill your darling. Kill your darlings. It's part of this industry. You have to do that sometimes. Yes. Yes, and a couple of questions from the web. The first: "The investment phase in games remain high. How do you balance the risk in terms of self-publishing versus potential platform deals going forward, especially in terms of recent returns on new releases? Yes, I mean, platform deals are great typically. I mean, at least when we announce that we have platform deals, it's because we have made an assessment that they are not cannibalizing in the self-publishing part of it. So it's definitely something we'll continue to do. It's not always that we have the choice for it. It's a thing that is quite cyclical in this industry. So during some years, the big platforms are looking to spend more on doing collaborations with publishers like us, and then, in other years, they are looking to spend less. Does that mean that they're looking to spend less right now compared to- Uh, uh- two-three years ago? ... I would say that, yes, in the last year- Mm ... we've seen fewer platform deals or smaller platform deals than we saw a couple of years back. Are those typically signed, you know, in the startup phase of the project or typically later? They can be signed in any part of the phase of a project. I would sometimes it's at the start of the project, but most often it's sort of mid or end of the production cycle. You talked about SteamWorld and the focus on that IP. Yes. Does that mean you could go back on former titles and, and try to make more DLCs or expansions, or, or mainly talking about new projects a couple of years down the road? It is a discussion we're having right now, so exactly how can we maximize the potential in SteamWorld? So, yes, the question of can we look back at what has historically launched and see if we can do more business with that, is an important part of that question. We're not gonna announce any answer yet. All right. When can we expect to see results from the new initiatives that you plan to implement across the organization? Well, some of the initiatives, I think we can see relatively soon, in the next couple of months, but primarily on the games side, which is where we need to do most of the work and most of the improvements, the game production cycles are anywhere between 18 months to 36 months. And even though we can improve the ongoing productions already to some extent, it's not a quick fix. So process improvement and improvement of how we steer and guide our studios and production efforts, it sort of continuously happen over the next couple of years. If it's correct to assume that Amo Toys had an unusually good performance here in Q3, is it fair to assume we will see a similar unusually high performance in Q4? Well, you asked that earlier, so- Yeah ... I don't think we're prepared to give that clear guidance. On average, Yeah, I don't think we're gonna give that guidance clearly. All right. But as I said, we don't expect Q4 to be worse, as we've seen. No, it seems like they have a momentum, but you never know. I mean, the- The momentum is good. Momentum is absolutely good. The momentum looks good. Yeah. Mm. The team is very eager, of course, to make the best of Q4, and are working very hard at Amo Toys to realize and see if we can get the best Q4 ever as well. In terms of investments, if you would look to reduce capital investments, would you rather look at internal or external investments to begin with? If we would look to reduce that, then I think it would be... I mean, then we would look at both. Mm ... It's just sound business to obviously always reevaluate, are we doing the right things? Are we doing the right projects? What should we do going forward? All right, Looks like you have a lot of questions there. We have a lot of questions, but I think we have gone through most of them. Yeah. So with that said, I, I think, I will thank you for taking the questions, and thank you to the audience as well for tuning in. Thank you, Simon. Thank you, Simon. Yeah. Thank you, everyone. Thanks. Have a good day. Yeah, bye.