Hi, everyone, and welcome to today's quarter presentation for Coffee Stain Group. I'm Anton, and I sit here together with Erik, our CFO, and we are at the Coffee Stain main office, the office in Skövde, where everything started back in 2010, which feels very nice. So, yeah, let's do it. Let's get into the presentation. Yeah.
All right. So, we're going to go through the quarter in brief, talk a little bit about the game portfolio, and then Erik will take the financial numbers, and then we will give a little bit looking ahead. And finally, we will end this presentation with Q&A. And also a reminder, we have had the questions sent in on our mail, that you can find in the description. So if there's any other questions during the presentation, feel free to send them in as well, and we will try to answer as many as possible. So that said, let's do it. So, quarter in general, stable quarter. We had SEK 293 million of net sales, and cash EBIT of SEK 146 million.
Pretty strong quarter for Coffee Stain. This quarter was heavily supported by releases in the quarter and the core portfolio that has performed well. Also, like, obviously, the big thing for Coffee Stain during this quarter was that we became a listed company, spinning off from Embracer. But as I said, the two main things that we would like to lift here is obviously the Satisfactory release on consoles for Xbox and PlayStation. That has been a strong contributor, and I think it was one of those releases that we have been looking forward for a very long time. It's one of our most important games and it was very nice to finally see it coming out on consoles.
And, the most pleasant for us, I think, was to see that it was very well reviewed, strong review scores and players seemed to be very happy with the release. It was something that we have worked hard on, of course. A nd in addition to that, we also had the important release of our Goat Simulator 3 with the Baadlands, DLC that dropped in November, which was also a nice, release and one of those, things that we do. This is a game that we've been working, or a franchise that we've been worked on for a very long time, and we just keep, keep supporting. So Baadlands: Furry Road, went out, as well. And then also the introduction of Goat Simulator 3 on Amazon Luna with a platform deal that also contributed.
And then obviously as well, we had the seasonal end of the year with the seasonal sales. That is a yearly event that always has a big impact on our business, and it was a good seasonal sale as well this year. So happy with that. And then finally, we also had the introduction or the integration, I would say, of Fellowship, the game that was moved from Arc and the Embracer Group over to Coffee Stain ahead of the spin-off. And we have been working since then to integrate it. It's a quite big live service game that has a...
It's a little bit different compared to our other titles in the sense that it's a server-based game, so we have a lot of work right now to kind of move that over to Coffee Stain from the previous publisher. But we work very tightly with the developer on it, and there's a continuous effort going into Fellowship, so. Then I also want to just say a few words about the monetization that we get quite a lot of questions on.
Me and Erik, we have met with a lot of investors, and this is one of the things that we get a lot of questions on, and like whether Coffee Stain can like do more on monetization, or just can't you just, you know, increase the prices or release more DLCs? And we just want to reiterate here that, I mean, we are first and foremost focusing on just making great games, that's the core. And we have a strong belief in like the long longevity of these titles, and it's not as easy as just increasing the prices or just putting out more things for sale to make a better business. For us, it's like ultimately we need to keep making our gamers happy and like delivering strong products is key to that.
I think our historical... It's not changed a lot. We've been doing the same over all these years, and it's a strategy that we keep kind of pushing. So quality first, but then we ongoingly kind of look at all titles and do individual assessments on how to do it. And the more mature a game is in our portfolio, the more we can look into monetization. But in the end, it's always like it's a competitive market, and we have to make sure that our prices are competitive and that the customers feel that they get a lot of value from their purchases and are happy, and that's key for us. So that said, I'm leading over to Erik to go through some of the numbers.
Thank you, Anton. So let's dig into some financials here. We have a quarterly trend in front of you, and as a reminder, we divide our net sales into two different categories, where we have the game launch uplift is basically the launch, the game release effect. We have the first 60 days from that release. And as you can see, this quarter, we had a benefit from the releases, which gave a very good impact on our Cash EBIT on the stable cost base. And that shows also that our business model, when we have strong releases, you get almost everything right back into profits.
Looking at the year-over-year comparison, you can see that even though this quarter was good, the comparison period's quarter was, like, very strong, with two significant releases on Satisfactory 1.0, and also Goat release in good deals that we had this quarter. But if you zoom out and look at Q3 2025-2026, comparing to this year's other quarters, it's a very good quarter, and we are happy to see that we also can have a good margin. On the challenges side, we had the US dollar movement, which is affecting us, where we have our platforms settles, and majority of our platforms settles in dollar. So, and a movement in the dollar versus SEK get a quite a significant impact on top line.
So yeah, let's take the next slide. To zoom out a bit, look at the last 12 months trend. We have generated SEK 917 million in net sales, and of which 90% come from our core IPs. On a year-over-year basis, we have, like, decreased, and as you can see there, the growth and the constant currency growth, there is already a gap here on the 12-month basis, which is reflecting then the US dollar movement. On the Cash EBIT, we have solid margins, where our operating cost base is stable quarter-over-quarter, where roughly 80% of the cost we have is allocated to the core IPs. And the other 20% goes in new IPs, where the majority is within our own studios. Our financial position is very strong.
We have SEK 540 million in the bank at per Q3, and our cash conversion on cash EBIT have been 99% the last 12 months, which is, like, not really normalized since we have. You should reduce tax also, and we have historically haven't had the tax payment since we have been part of Embracer Group, so it's very strong. In this quarter, we had the working capital movement, which was negative. That was basically because we had a strong end of the quarter in December, and also payment to royalties paying, so that's not generated this quarter cash as good as the cash EBIT was. Yeah, I think we can go to the next slide.
All right. Let's talk a little bit of looking ahead. And I think first off I would just want to kind of reiterate that, me and Erik, we don't intend to sit and give, like, a lot of these release dates, for the future releases. Like, we announce release dates and games through our studios directly. So I think the best way to follow Coffee Stain's portfolio and what we're doing is actually to look into the different store pages on Steam and other platforms, where we always communicate things when those dates are available. And this ties back to the strategy we have, where we are quite agile and iteratively, and release dates are very hard to set long in advance.
We prefer to announce them when we are really sure, and we also want to give us that flexibility to always be kind of stay agile. So that said, there are a couple of things that are publicly announced, and here on this slide, we give some of those examples. First, we have, obviously, the Season VI of Deep Rock Galactic that has already been released. It went out last week.
And it's a little bit early to give more color on that, but I can just say we are pretty happy to see that we had the season coming out now again after a little bit of a break, I would say, in that, where Ghost Ship has also been focusing a lot on the coming game, Rogue Core, but now we also have more developers working on Deep Rock. So they released Season VI last week, and it's just nice to see that it's ongoing things happening with Deep Rock. Then we have another announced big thing happening in February, where Fellowship is getting a bigger update that we look forward to seeing the results of. So that's one.
Then there's a handful of other announced games that you can look into that don't yet have release dates. There's also other things in addition to this. We have, but it's a lot of games in Coffee Stain's portfolios. We don't go through all of them, but personally, I'm, I like, I played the... I actually tested the Lavapotion: Wielders of the Essence in the weekend, and I had quite a lot of fun with that in an early format. So there's a lot of things cooking in the group, and yeah, so but stay tuned on that.
Great.
That actually takes us to the Q&A.
Yeah.
Yeah.
That marks the end. So, now we will have a Q&A session, and I will also say that we have some further appendix in the presentation we will upload on the webpage, where you can dig deeper into the FX effects and also cash flow. So that we will also upload together with this presentation. So let's see what we have got from the questions coming in here. We have the first question is regarding the release pipeline. Where we get the question that, could you provide an update release schedule for key titles, including Deep Rock Galactic spin-off or any additional launches?
And, then I guess I would go back to a little bit what I, I just said that we don't give out any new release dates or anything during this presentation. So, like, when it comes to Deep Rock or spin-offs, the best is to tune in to Ghost Ship's channels and follow their Steam pages, and there will be announcements coming there when they are available, basically .
The next question is regarding FX. So to what extent do you expect FX headwinds and back-catalog normalization to continue affecting top-line performance? I think I said during the presentation, we have a direct exposure against US dollar since almost every net sales is settled in US dollar, although the transactions made on the platforms are not only in dollars, so the exposure is not as big as the settlement exposure.
Yeah. I f you look at Steam, for example, it's like they have multiple currencies. It's like, I don't know, 20, 30 currencies or something, and all platforms work like that. So when we sell the games, It's a lot of currencies, and this, I think the FX thing is, it's quite complex to kind of dive into.
It's not nothing that have kept me awake at night in the past, and I think, like, you both have the FX effects that come in, but we also see that geographical expansion and changes across all platforms are also having quite a huge impact on them, which is something that is even harder maybe to kind of calculate, but it definitely has an impact-
It does
... with the dollar. So, but I think the main what we are more maybe like when we think about what's going to be the biggest contributing factors, obviously, when we release new games or when the big releases around our core IPs or like how those are received, that's I think more important for us .
Okay, next question. With the pro forma net cash of around SEK 500 million, how are you thinking about capital allocation priorities, particularly the pace and size of potential M&A?
All right. So, as we said as well, with during the, I think, our Q&A had with the capital market event we had in December we have a pretty nice amount of cash. That said, we are very selective in our process if we investigate M&A. It is very tough to do M&A, and I think generally in the games industry. So we would likely, if we look at that, it's probably going to be something similar to what we're already doing.
Like, we like to do this, you know, we have small teams with unique projects that we think there's a chance to build into something big and successful. But we are not. I mean, M&A-driven as a company. So, as we said in the past as well, if we don't find like good opportunities, we're not going to kind of do anything. We go, then we're probably gonna, you know-
Return the capital.
... Return the capital, exactly-
To the Shareholders
... to the shareholders, exactly.
We also have, like, adopted the dividend policy so the support decision finally, but as you say, if we don't find anything, and we can build this cash pile, we will return the capital to the shareholders. Next question. Cash EBIT margin came in well ahead of company-collected consensus. How sustainable is the margin profile into next fiscal year, 2026, 2027?
I think we have had historically, we've always had quite strong Cash EBIT margins. How sustainable that is, as long as we maintain our quite strict kind of discipline on cost allocation and the way we develop our games, the costs are probably not gonna... You know, it's not- they're not gonna move away in any unexpected ways. But then it's obviously very connected with how well our core portfolio and our core titles perform combined with new releases in the future. So it's obviously a tough business. But yeah, we don't see any, like, huge changes in what we think about.
The cost structure.
Yeah.
No, and then we also, like, quarter-over-quarter, we have a very stable cost base, as you also can see in the appendix for this presentation. Of course, if you have a solid baseline we will be profitable, and then if we have releases, then you get a good margin, like increase, as we saw in-
And then it's going to be different quarter from quarter. It can be a little bit different, but,
Yeah
Y eah.
So the launches is affecting highly, but even though we don't have a releases, we still have very solid want to have solid cash margins.
Yeah, and I think that's very important to like stress again. We have our games are more like 90% of our revenues for the last 12 months coming from these core titles that we have, and that's... Our focus is a lot on that, kind of just keep building on them, and like we really believe in that. I mean, games that are unique and strong, like many of we have, they can stay around for a very long time if we play our cards right .
Good. So next question. How do you plan to capitalize on the Fellowship IP? What will be the coming larger update in February?
So, I think it's a little bit early to go into maybe more detail on it. W e don't consider it a core, core IP at this point. But what we do say here is it's, it's a live service game. It's gonna need further investment. We have seen, like, there's been a slight decline in activity since we got it into Coffee Stain. And now we are, like, we are looking at, you know, the audience and the community, and there's a lot of efforts going into these updates that, obviously had the hope to kind of make it more successful over time.
And then we're going to have a quite similar approach, I think, to our other games, where we're very keen on making sure that players get a strong, you know, a really solid experience, and then we're gonna look into monetizing that over time. I guess one difference with Fellowship is that they are introducing a microtransaction shop for that game. And I think it's more expected of a game like that to maybe have some skins or stuff that you can buy. But we are very cautious about that, and aware, obviously, that it can have maybe not always great perception from players to do that. So we are taking it carefully, but it's also, it's a live service games that will need a little bit different approach . as compared to other titles.
It's also an Early Access, so...
Exactly
... there's still a lot of things to do to improve the game and the team is working really hard to achieve that.
Yeah. Yeah, exactly. So and, but also on what you can do is, follow Fellowship. They have a really good community manager, that they do nice videos where they talk about this update as well. So you can tune into that and get a little more context, but I think they're putting some focus on the first player experience. There's going to be some new playable characters coming in the update. And, I mean, it's a fun game. I have actually, I've spent quite a lot of time in it myself, so, I'm looking forward to it as well, personally.
Okay, next question. Any more information you can give with the recent announced game, Huntdown: Overtime?
Yeah, more... Nah, not so much more to add at this point. I think, we're very happy to announce it. It's been a game that has been worked on for quite some time. And it's, it's a very cool game. I like it, it has a lot of personality. And they are taking a little bit of a twist with this one, I guess, compared to the original Huntdown, trying to address some of those, I guess, challenges that the title had.
It was quite linear and stuff, and now they're going for more of a roguelike setup, with the hopes of having better retention and replayability, I guess, first and foremost. So, but it was very nice to see, like, the trailer that they put out. Seems to get quite good receptions from players, and, but, yeah, but wish them best of luck, and, yeah, we'll have to stay tuned.
Go troll it down.
Go troll it down.
Next question: It seems that your investment into game development comes at roughly 25% at growth initiatives and 75% live op and current franchises. How do you see this affecting your long-term growth? Yeah, I think we previously said that it's more of 80/20 at this point. It can, of course, change slightly also when we added Fellowship, and so it's looking back, it's more 80/20, and it can also change going further.
But I think it's, again, a very, like, as the way we look at it, like, some of the biggest, the biggest game companies today, or, like, the most successful games, in general, or companies, they are usually having a very few strong titles that they've been working on for a very long time, and that's the way we look at it. So it's not like we invest so much into our core portfolio because we think that's where we're gonna get the most, bang for the buck, basically.
So it's, I think it's good for our long-term growth. And, like, we have to be aware that this is a risky, very risky industry. So we try to kind of take that into account of how we do investments. Even though the number 20% might sound not a lot, it's also, you have to remind everyone here that we typically start with very small projects. Like, we rather start them small, and then we grow them over time, and then ultimately, in the best of cases, it becomes core IPs for us. So, yeah.
Yeah, exactly. And, like, the trailing 12 months cost base is rather up to SEK 500 million, so 20% of that is quite a lot also.
Exactly.
Okay, next question: Should one expect that other platform deals coming up in the following 12 months?
I don't think we can do any comments on that, but, generally, I would say that platform deals is something that we evaluate on a, kind of, ongoing basis, with, you know, it's, also some games have had platform deals more than once, and, but we always work with the platforms on this. But we look at it more like, kind of, we do it when it makes sense. W e don't consider it like a core thing for the... It's, it's a cherry on top when we do them, I think, mostly. So can't really do any more comments on that.
Next question: Any comments on the potential for the full release of Valheim 1.0 in 2026, 2027? How is the game progressing in terms of development?
Yeah, it's a tough one, I would say. It's obviously a core game for us, so we look forward to the 1.0 release a lot.
We haven't yet disclosed any date or?
No, it's not, there's not a.
In the studios
Exactly, we haven't disclosed any date on it. But generally talking of the 1.0 release, when it happens, it's an important game for us. And I think personally, I think on consoles, I would expect it to be more important with the 1.0 as opposed to PC, because what we've seen in the past is that early access as a concept is more adopted on PC, where players are maybe a little bit more used to that, and also the way games are kind of promoted through the platforms themselves.
Early access is not something that has been as focused, I would say, from the platform holders. So, in terms of development, Iron Gate is working hard on it, and as with all the other release dates, they will come back with the once there are any dates to announce. So i t's an important game for us, of course. So we look forward to when we can say more about it.
Erik, do you expect the negative working capital effect in the quarter to be reversed in the coming quarters? So yeah, so one important factor in that we had not converted every Cash EBIT to cash, was that we had a strong ending of the quarter, basically. So December was a strong month, where we had the seasonal sale, and we had the continued contribution from some of the releases.
So yeah, that effect will definitely reverse, since the platform is roughly 50 day from where you sell a game to you get the cash collected. And the other effect we had was more of a timing effect on paying royalties, so that was also temporary, I would say. So next question. Okay, Fellowship is a live service game where sales seems to be correlated to content being released. Can you add some thoughts on the update coming to the game next week?
So I think we gave a little bit of color on this already, but again, I would recommend you to go in to look into the Steam page and then also see the videos from the developer, where they talk about the update in question. And then I can say, since it's live, as this question also states, it's gonna be very important to that release, have a good content cadence and release things that the players want, is obviously top priority for the title, so.
Yeah. Okay, next question: Can you add your thoughts on Genie 3 in general, or overall view of all AI risks and benefits?
Yeah, AI is obviously on everyone's mind. I mean, you have to kind of say it, it's quite cool, what is being done, and you kind of get impressed. That said, I think it's, games are ultimately, it's a lot of, it's a lot of kind of fine, fine touch. And, like, i t's a big, big difference in having, like, a open world to run around in, and it can look beautiful and something that is actually fun to play. So I think there's still quite a lot to prove. That said, we have to stay on our toes, and we obviously follow these developments across the industry right now, what's going on.
AI is definitely going to have big impacts on how games are being developed, but I think AI is going to have impacts on pretty much every industry. So it's not only games, and... But for us, I would say that I'm pretty optimistic in, so far it seems that most of these tools, what they do is actually they empower our developers, so we can do more with our small teams. And that's something that's very exciting. So, like, it can, you know, make code- the coding more efficient or, like, there's, there's a lot of things that you can do with AI.
But then also, I think it's worth to kind of remember that when I looked at Steam top sellers this morning, you still see Counter-Strike up there, and that game is not very new. The question is obviously whether AI is gonna be able to, you know, overthrow that. Is there gonna be AI games in the future? Potentially. There's definitely gonna be games. But then, which games you're gonna play? I'm not entirely sure. I mean, you have people playing chess and ... I mean, I, I play a lot of Go, the board game, still a nd it's like, I isn't really... That game's a couple of thousand years old, and so we'll see, but it's very exciting. Yeah.
Yeah. Okay. Okay, next question. Looking specifically at Welcome to Bloxburg, how do you view the changes to monetization on the Roblox platform will affect the sales generated from the game? Also, how much of the baseline net sales were attributable to Welcome to Bloxburg during this quarter?
I think, like, starting with the first part of the questions, I'm not actually fully aware of exactly what the, like... The changes to the monetization has not changed that much. I think it's like the platform is, I guess, some sense more similar to mobile and free-to-play, in the sense that it's like most games are free, and there you have to kind of find ways to monetize in the games.
So Welcome to Bloxburg is one of those titles where there's a lot of in-game monetizations, as with other titles on the platform. And then we don't comment on exactly how much it's contributing to the quarter, but what we can say is, like, as also, like, we talked about during the capital market event, is that the title has had challenges and we've not seen, like, it going maybe in the direction we wanted since we acquired it. And it's still, like, it's a very strong contributor to the— we still consider it a core IP for Coffee Stain, b ut there's no big changes in anything at this point. The team is working very hard and doing what they can. And like, we do, we test new things, and like, there's updates coming for it. So but it's one of those... We'll have to wait and see.
Okay. I think that was everything from the questionnaire.
Okay. Excellent. Then I guess we can just say again, thank you to everyone listening in. I mean, if you have more questions, you can always mail them to ir@coffeestaingroup.se.
Yes.
Thank you very much.
Thank you.